Annual report [Section 13 and 15(d), not S-K Item 405]

Commitments and Contingencies

v3.25.4
Commitments and Contingencies
 12 Months Ended
Dec. 31, 2025
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Leases
The table below summarizes the components of lease expense and income statement location for the years ended December 31, 2025 and 2024:
Years Ended December 31,
Line Item in our Consolidated Income Statements 2025 2024
Operating lease costs:
Operating lease costs General and administrative expenses $ 355,912  $ 325,396 
Total lease costs $ 355,912  $ 325,396 

Supplemental information and balance sheet location related to leases for the years ended December 31, 2025 and 2024 was as follows:
Years Ended December 31,
2025 2024
Operating Leases:
Operating lease right-of -use asset $ 1,572,173  $ 555,536 
Operating lease liability, current portion $ 194,179  $ 483,337 
Operating lease liability, net of current portion 1,815,527  311,689 
Total operating lease liability $ 2,009,706  $ 795,026 
Weighted average remaining lease term (in years):
Operating leases 5.4 3.6
Weighted average discount rate:
Operating leases 6.5  % 6.5  %
Supplemental cash flow information related to leases for the years ended December 31, 2025 and 2024 were as follows:
Years Ended December 31,
2025 2024
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases $ 460,056  $ 505,577 
Non-cash transactions: ROU assets obtained in exchange for lease liabilities
Operating lease 1,554,504  — 
Maturities of lease liabilities as of December 31, 2025 were as follows:
Operating Leases
2026 $ 268,762 
2027 467,453 
2028 479,129 
2029 491,077 
2030 503,374 
Thereafter 211,904 
Total lease payments 2,421,699 
Less: Imputed interest (411,993)
Total lease obligations 2,009,706 
Less: Current obligations (194,179)
Long-term lease obligations $ 1,815,527 
Guaranties in Connection with the Sale of the Divested Business
In connection with the sale of company-owned or managed clinics, we guaranteed 39 future operating lease commitments assumed by the buyers. We are obligated to perform under the guaranties if the buyers fail to perform under the lease agreements at any time during the remainder of the term of the lease agreements, the latest of which expires on December 31, 2033. As of December 31, 2025, the undiscounted maximum remaining lease payments totaled $5.0 million. We have not recorded a liability with respect to our obligations under the guaranties as of December 31, 2025, as we concluded that payment under the guaranties was not probable.
Litigation
In the normal course of business, we are party to litigation and claims from time to time. We maintain insurance to cover certain litigation and claims, subject to policy limits.
During the second quarter of 2024, we entered into settlement agreements from litigation related to employment matters of $1.5 million that was outside the normal course of business which we have accrued for in discontinued operations current liabilities as of December 31, 2025. The settlement is expected to be paid out during the first quarter of 2026.
Additionally, ongoing litigation related to a medical injury claim between a patient (“the Claimant”) and us filed on September 5, 2023 reached a settlement agreement on February 25, 2025. Per the terms of the settlement agreement, we and our insurance will pay the claimant $3.4 million. We accrued the settlement recorded in discontinued operations current liabilities for $3.4 million as of December 31, 2024. The expense from the accrual was offset by a receivable recorded as discontinued operations current assets from our insurance providers for $1.9 million as of December 31, 2024. The settlement was paid in full during the first quarter of 2025.
In 2025, we determined that the likelihood of a loss related to multiple lawsuits, including three cases consolidated into one class action lawsuit (but not yet certified), six individual cases related to each other by the court and two unrelated individual cases, all filed against us and a chiropractor employed by the professional corporation providing clinical services in 2024, 2025 and 2026 in the State of California became probable. The initial lawsuit was filed against us on June 6, 2024 with the Superior Court of California in Los Angeles County. The lawsuits allege, among other claims, an invasion of privacy, negligence, emotional distress, sexual harassment, unlawful recording, failure to provide a safe environment and trespass on person at one of our company-owned or managed clinics. The lawsuits are currently in discovery and trial is scheduled to begin in early 2027. We intend to continue to defend these cases vigorously, but it is not possible at this time to reasonably estimate the outcome of or any potential liability from these cases and therefore, no accrual exists as of December 31, 2025. We also note that our exposure to these cases may be limited by our insurance coverage, but the potential exposure is undetermined as of December 31, 2025.
During the year ended December 31, 2025, we incurred litigation expenses, including settlement costs related to employment matters that were outside the normal course of business, of $0.4 million, included as Income (loss) from discontinued operations before income tax expense in our consolidated income statements.
During the year ended December 31, 2024, we incurred litigation expenses, including settlement costs related to employment matters that were outside the normal course of business and a medical injury claim, of $3.0 million, included as Income (loss) from discontinued operations before income tax expense in our consolidated income statements.